Higher-Priced Mortgage Loan Escrow Exemption (Regulation Z); Correcting Amendments, 29685-29687 [2021-11571]

Download as PDF khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 86, No. 105 / Thursday, June 3, 2021 / Rules and Regulations while balancing goals, scale, timeline, feasibility, and available resources. Additionally, the NRC’s Information Quality Program 13 ensures that all information relied on by the NRC is subject to rigorous quality standards. 2. Relevance and Utility—The NRC ensures that evidence-building activities are relevant and provide useful findings to inform agency activities, actions, and stakeholders. The NRC performs evidence-building activities to examine questions of importance and serve the information needs of stakeholders. The NRC presents findings that are clear, concise, actionable, and available within a timeline that is appropriate to the questions under consideration. The NRC’s evidence-building priorities consider legislative requirements; the NRC’s strategic goals, objectives, and strategies; and the interests and views of stakeholders. 3. Transparency—The NRC is committed to conducting evidencebuilding activities in an open and transparent manner, which keeps stakeholders informed. The NRC’s evidence-building activities are conducted openly and the public must be informed about and have an opportunity to participate in the NRC’s regulatory process. As a regulator, the NRC listens to, respects, and analyzes different views from its stakeholders. The NRC ensures open channels of communication are maintained between internal and external stakeholders, including Congress, other government agencies, licensees, nongovernmental organizations, individual members of the public, and international and domestic nuclear communities. The NRC takes reasonable measures to make all information, including information about the NRC’s evidence-building activities (including their purpose, objectives, design, findings, and methods), broadly available and accessible. The NRC releases public evidence-building findings in a timely manner and archives the data for secondary use by stakeholders, as appropriate. 4. Collaboration—The NRC is committed to working collaboratively when conducting evidence-building activities and draws on the expertise of subject matter experts to ensure diversity in perspectives. The NRC fosters a collaborative work environment that encourages diverse views, alternative approaches, critical 13 Management Directive 3.17, ‘‘Information Quality Program,’’ ensures that peer review is conducted on all influential scientific information and highly influential scientific assessment that the agency intends to disseminate. VerDate Sep<11>2014 20:08 Jun 02, 2021 Jkt 253001 thinking, creative problem solving, unbiased findings, and honest feedback. The NRC emphasizes trust, respect, and open communication to promote a positive work environment that maximizes the potential of all individuals, which improves evidence building and evaluation activities. A collaborative environment leverages expertise from subject matter experts and enables peer reviews to ensure rigorous evidence-building. The NRC conducts research and collaborates with organizations that develop consensus standards to improve data and methods used in risk analysis. The NRC collaborates with national laboratories, Agreement States, other Federal agencies, universities, and international organizations. 5. Independence and Objectivity—As an independent Federal agency, the NRC is committed to conducting evidence-building activities that are independent and based on objective assessments and analysis of all relevant information. The NRC was established as an independent agency to regulate civilian uses of radioactive material. The NRC’s evidence-building activities are independent and objective to maintain credibility and integrity. The implementation of evidence-building activities, including the selection and assignment of the staff, should be appropriately insulated from factors that may affect objectivity, impartiality, and professional judgment. Evidencebuilding is inclusive and the NRC seeks input from a broad range of stakeholders in setting priorities, identifying questions, and assessing the implications of findings. The NRC strives for objectivity in the planning and conduct of evidence-building activities. 6. Ethics—The NRC is committed to conducting evidence-building activities that adhere to Government-wide ethics standards to protect the public and maintain public trust. The NRC’s evidence-building activities comply with relevant legal requirements and are conducted in a manner that is free from conflicts of interest, undue influence, the appearance of bias, and safeguards the dignity, rights, safety, and privacy of participants. The NRC complies with Governmentwide ethics standards contained in Federal statutes and regulations, which are intended to ensure that every citizen can have confidence in the integrity of the Federal Government. BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB–2020–0023] RIN 3170–AA83 Higher-Priced Mortgage Loan Escrow Exemption (Regulation Z); Correcting Amendments Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretations; correcting amendments. AGENCY: This document corrects the Official Interpretations (Commentary) to Regulation Z. Specifically, the Bureau of Consumer Financial Protection (Bureau) is adding a comment to its Commentary that it included in a recent higherpriced mortgage loan escrow exemption final rule but that was not incorporated into the Code of Federal Regulations (CFR) due to an omission in an amendatory instruction. The Bureau is also revising a comment that it included in the same recent final rule, but that inadvertently did not appear in a subsequently effective final rule. DATES: The corrections are effective on June 3, 2021. FOR FURTHER INFORMATION CONTACT: Joseph Devlin, Senior Counsel, Office of Regulations, at 202–435–7700 or https:// reginquiries.consumerfinance.gov/. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background The Bureau is issuing this document to correct two comments in the Bureau’s Commentary to Regulation Z, which implements the Truth in Lending Act.1 In the final rule titled ‘‘Higher-Priced Mortgage Loan Escrow Exemption (Regulation Z)’’ (Escrow Exemption Final Rule), published in the Federal Register on February 17, 2021 (86 FR 9840), the Bureau included Paragraph 35(b)(2)(vi)(B) in its commentary text for the rule, but omitted the related amendatory instruction to add that specific paragraph to the Commentary. This omission was a scrivener’s error. The Bureau is therefore issuing this correction to ensure that Paragraph 35(b)(2)(vi)(B) is incorporated into the Commentary published in the CFR. Additionally, the Bureau is amending the CFR to revise a comment that the Bureau amended in the Escrow Exemption Rule but that inadvertently [FR Doc. 2021–11637 Filed 6–2–21; 8:45 am] 1 15 BILLING CODE 7590–01–P PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 29685 E:\FR\FM\03JNR1.SGM U.S.C. 1601 et seq. 03JNR1 29686 Federal Register / Vol. 86, No. 105 / Thursday, June 3, 2021 / Rules and Regulations did not appear in a subsequently effective final rule. In the Escrow Exemption Rule, the Bureau amended preexisting Paragraph 43(f)(1)(vi). This amended comment was incorporated into the CFR on the February 17, 2021 effective date of the Escrow Exemption Rule; however, an unamended version of the preexisting comment was included in the Bureau’s final rule titled ‘‘Qualified Mortgage Definition Under the Truth in Lending Act (General QM Loan Definition)’’ (General QM Rule) (85 FR 86308). The General QM Rule was published in the Federal Register on December 29, 2020, but it did not take effect until March 1, 2021.2 The unamended version of the preexisting comment therefore inadvertently replaced the amended version when the General QM Rule was incorporated into the CFR. The Bureau is therefore issuing this correction to ensure that the CFR contains the intended version of this comment that the Bureau amended in the Escrow Exemption Final Rule. Regulatory Requirements: The Bureau finds that public comment on this correction is unnecessary because the Bureau is correcting inadvertent, technical errors, about which there is minimal, if any, basis for substantive disagreement. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.3 The Bureau has determined that these corrections do not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act.4 List of Subjects in 12 CFR Part 1026 Advertising, Banks, banking, Consumer protection, Credit, Credit unions, Mortgages, National Banks, Reporting and recordkeeping requirements, Savings associations, Truth-in-lending. khammond on DSKJM1Z7X2PROD with RULES For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below: amending commentary, the Office of the Federal Register requires reprinting of certain subsections being amended in their entirety rather than providing more targeted amendatory instructions and related text. 3 5 U.S.C. 603(a) and 604(a). 4 44 U.S.C. 3501 et seq. VerDate Sep<11>2014 16:04 Jun 02, 2021 Jkt 253001 1. The authority citation for part 1026 continues to read as follows: ■ Authority: 12 U.S.C. 2601, 2603–2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq. 2. Amend supplement I to part 1026— Official Interpretations by: ■ a. Adding Paragraph 35(b)(2)(vi)(B); and ■ b. Revising Paragraph 43(f)(1)(vi). The addition and revision read as follows: ■ Supplement I to Part 1026—Official Interpretations * * * * * Section 1026.35—Requirements for Higher-Priced Mortgage Loans * * * * * 35(b) Escrow Accounts * * * * * 35(b)(2) Exemptions * * * * * Paragraph 35(b)(2)(vi)(B). 1. The transaction threshold in § 1026.35(b)(2)(vi)(B) differs from the transaction threshold in § 1026.35(b)(2)(iii)(B) in two ways. First, the threshold in § 1026.35(b)(2)(vi)(B) is 1,000 loans secured by first liens on a principal dwelling, while the threshold in § 1026.35(b)(2)(iii)(B) is 2,000 loans secured by first liens on a dwelling. Second, all loans made by the creditor and its affiliates secured by a first lien on a principal dwelling count toward the 1,000-loan threshold in § 1026.35(b)(2)(vi)(B), whether or not such loans are held in portfolio. By contrast, under § 1026.35(b)(2)(iii)(B), only loans secured by first liens on a dwelling that were sold, assigned, or otherwise transferred to another person, or that were subject at the time of consummation to a commitment to be acquired by another person, are counted toward the 2,000-loan threshold. * * * * * Section 1026.43—Minimum Standards for Transactions Secured by a Dwelling Authority and Issuance 2 When PART 1026—TRUTH IN LENDING (REGULATION Z) * * * * * 43(f) Balloon-Payment Qualified Mortgages Made by Certain Creditors 43(f)(1) Exemption * * * * * Paragraph 43(f)(1)(vi). 1. Creditor qualifications. Under § 1026.43(f)(1)(vi), to make a qualified mortgage that provides for a balloon payment, the creditor must satisfy three PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 criteria that are also required under § 1026.35(b)(2)(iii)(A), (B) and (C), which require: i. During the preceding calendar year or during either of the two preceding calendar years if the application for the transaction was received before April 1 of the current calendar year, the creditor extended a first-lien covered transaction, as defined in § 1026.43(b)(1), on a property that is located in an area that is designated either ‘‘rural’’ or ‘‘underserved,’’ as defined in § 1026.35(b)(2)(iv), to satisfy the requirement of § 1026.35(b)(2)(iii)(A) (the rural-or-underserved test). Pursuant to § 1026.35(b)(2)(iv), an area is considered to be rural if it is: A county that is neither in a metropolitan statistical area, nor a micropolitan statistical area adjacent to a metropolitan statistical area, as those terms are defined by the U.S. Office of Management and Budget; or a census block that is not in an urban area, as defined by the U.S. Census Bureau using the latest decennial census of the United States. An area is considered to be underserved during a calendar year if, according to HMDA data for the preceding calendar year, it is a county in which no more than two creditors extended covered transactions secured by first liens on properties in the county five or more times. A. The Bureau determines annually which counties in the United States are rural or underserved as defined by § 1026.35(b)(2)(iv)(A)(1) or § 1026.35(b)(2)(iv)(B) and publishes on its public website lists of those counties to assist creditors in determining whether they meet the criterion at § 1026.35(b)(2)(iii)(A). Creditors may also use an automated tool provided on the Bureau’s public website to determine whether specific properties are located in areas that qualify as ‘‘rural’’ or ‘‘underserved’’ according to the definitions in § 1026.35(b)(2)(iv) for a particular calendar year. In addition, the U.S. Census Bureau may also provide on its public website an automated address search tool that specifically indicates if a property address is located in an urban area for purposes of the Census Bureau’s most recent delineation of urban areas. For any calendar year that begins after the date on which the Census Bureau announced its most recent delineation of urban areas, a property is located in an area that qualifies as ‘‘rural’’ according to the definitions in § 1026.35(b)(2)(iv) if the search results provided for the property by any such automated address search tool available on the Census Bureau’s public website E:\FR\FM\03JNR1.SGM 03JNR1 Federal Register / Vol. 86, No. 105 / Thursday, June 3, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES do not identify the property as being in an urban area. B. For example, if a creditor extended during 2017 a first-lien covered transaction that is secured by a property that is located in an area that meets the definition of rural or underserved under § 1026.35(b)(2)(iv), the creditor meets this element of the exception for any transaction consummated during 2018. C. Alternatively, if the creditor did not extend in 2017 a transaction that meets the definition of rural or underserved test under § 1026.35(b)(2)(iv), the creditor satisfies this criterion for any transaction consummated during 2018 for which it received the application before April 1, 2018, if it extended during 2016 a firstlien covered transaction that is secured by a property that is located in an area that meets the definition of rural or underserved under § 1026.35(b)(2)(iv). ii. During the preceding calendar year, or, if the application for the transaction was received before April 1 of the current calendar year, during either of the two preceding calendar years, the creditor together with its affiliates extended no more than 2,000 covered transactions, as defined by § 1026.43(b)(1), secured by first liens, that were sold, assigned, or otherwise transferred to another person, or that were subject at the time of consummation to a commitment to be acquired by another person, to satisfy the requirement of § 1026.35(b)(2)(iii)(B). iii. As of the preceding December 31st, or, if the application for the transaction was received before April 1 of the current calendar year, as of either of the two preceding December 31sts, the creditor and its affiliates that regularly extended covered transactions secured by first liens, together, had total assets that do not exceed the applicable asset threshold established by the Bureau, to satisfy the requirement of § 1026.35(b)(2)(iii)(C). The Bureau publishes notice of the asset threshold each year by amending comment 35(b)(2)(iii)–1.iii. * * * * * Dated: May 26, 2021. David Uejio, Acting Director, Bureau of Consumer Financial Protection. [FR Doc. 2021–11571 Filed 6–2–21; 8:45 am] BILLING CODE 4810–AM–P VerDate Sep<11>2014 16:04 Jun 02, 2021 Jkt 253001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 73 [Docket No. FAA–2021–0483; Airspace Docket No. 19–ANM–84] RIN 2120–AA66 Amendment of Restricted Area R– 6413; Green River, UT Federal Aviation Administration (FAA), DOT. ACTION: Final rule; technical amendment. AGENCY: This action changes the using agency of restricted area R–6413, Green River, UT. The FAA is taking this administrative action in response to the requested change from the United States Air Force to the United States Army as the using agency. There are no changes to the boundaries; designated altitudes; or activities conducted within the affected restricted area. DATES: Effective date 0901 UTC, August 12, 2021. FOR FURTHER INFORMATION CONTACT: Christopher McMullin, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267–8783. SUPPLEMENTARY INFORMATION: SUMMARY: Authority for This Rulemaking The FAA’s authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it administratively amends the using agency for restricted area R–6413, Green River, UT. History The FAA evaluates utilization of special use airspace annually. For the past several years the utilization of restricted area R–6413 has declined steadily. The FAA in coordination with the United States Air Force and the United States Army, has concluded the restricted area is still needed, and the PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 29687 using agency should be transferred. Therefore, the using agency has changed from Deputy for Air Force, White Sands Missile Range, NM 88002 to Commanding General, White Sands Missile Range, NM, due to emerging Army requirements and their planned use of the restricted area R–6413. The Rule This action amends 14 CFR part 73 by revising the using agency listed for restricted area R–6413, Green River, UT. The using agency for R–6413 is changed from ‘‘Deputy for Air Force, White Sands Missile Range, NM 88002’’ to ‘‘Commanding General, White Sands Missile Range, NM’’. These are administrative changes and do not affect the boundaries, designated altitudes, or activities conducted within the restricted area; therefore, notice and public procedures under 5 U.S.C. 553(b) are unnecessary. Regulatory Notices and Analyses The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a ‘‘significant regulatory action’’ under Executive Order 12866; (2) is not a ‘‘significant rule’’ under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. Environmental Review The FAA has determined that this action of changing the using agency from the US Air Force to the US Army for restricted area R–6413; Green River, UT, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq.) and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5–6.5.d, ‘‘Modification of the technical description of special use airspace (SUA) that does not alter the dimensions, altitudes, or times of designation of the airspace (such as changes in designation of the controlling or using agency, or correction of typographical errors).’’ This airspace action is an administrative E:\FR\FM\03JNR1.SGM 03JNR1

Agencies

[Federal Register Volume 86, Number 105 (Thursday, June 3, 2021)]
[Rules and Regulations]
[Pages 29685-29687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11571]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026

[Docket No. CFPB-2020-0023]
RIN 3170-AA83


Higher-Priced Mortgage Loan Escrow Exemption (Regulation Z); 
Correcting Amendments

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official interpretations; correcting amendments.

-----------------------------------------------------------------------

SUMMARY: This document corrects the Official Interpretations 
(Commentary) to Regulation Z. Specifically, the Bureau of Consumer 
Financial Protection (Bureau) is adding a comment to its Commentary 
that it included in a recent higher-priced mortgage loan escrow 
exemption final rule but that was not incorporated into the Code of 
Federal Regulations (CFR) due to an omission in an amendatory 
instruction. The Bureau is also revising a comment that it included in 
the same recent final rule, but that inadvertently did not appear in a 
subsequently effective final rule.

DATES: The corrections are effective on June 3, 2021.

FOR FURTHER INFORMATION CONTACT: Joseph Devlin, Senior Counsel, Office 
of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Bureau is issuing this document to correct two comments in the 
Bureau's Commentary to Regulation Z, which implements the Truth in 
Lending Act.\1\ In the final rule titled ``Higher-Priced Mortgage Loan 
Escrow Exemption (Regulation Z)'' (Escrow Exemption Final Rule), 
published in the Federal Register on February 17, 2021 (86 FR 9840), 
the Bureau included Paragraph 35(b)(2)(vi)(B) in its commentary text 
for the rule, but omitted the related amendatory instruction to add 
that specific paragraph to the Commentary. This omission was a 
scrivener's error. The Bureau is therefore issuing this correction to 
ensure that Paragraph 35(b)(2)(vi)(B) is incorporated into the 
Commentary published in the CFR.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 1601 et seq.
---------------------------------------------------------------------------

    Additionally, the Bureau is amending the CFR to revise a comment 
that the Bureau amended in the Escrow Exemption Rule but that 
inadvertently

[[Page 29686]]

did not appear in a subsequently effective final rule. In the Escrow 
Exemption Rule, the Bureau amended preexisting Paragraph 43(f)(1)(vi). 
This amended comment was incorporated into the CFR on the February 17, 
2021 effective date of the Escrow Exemption Rule; however, an unamended 
version of the preexisting comment was included in the Bureau's final 
rule titled ``Qualified Mortgage Definition Under the Truth in Lending 
Act (General QM Loan Definition)'' (General QM Rule) (85 FR 86308). The 
General QM Rule was published in the Federal Register on December 29, 
2020, but it did not take effect until March 1, 2021.\2\ The unamended 
version of the preexisting comment therefore inadvertently replaced the 
amended version when the General QM Rule was incorporated into the CFR. 
The Bureau is therefore issuing this correction to ensure that the CFR 
contains the intended version of this comment that the Bureau amended 
in the Escrow Exemption Final Rule.
---------------------------------------------------------------------------

    \2\ When amending commentary, the Office of the Federal Register 
requires reprinting of certain subsections being amended in their 
entirety rather than providing more targeted amendatory instructions 
and related text.
---------------------------------------------------------------------------

    Regulatory Requirements: The Bureau finds that public comment on 
this correction is unnecessary because the Bureau is correcting 
inadvertent, technical errors, about which there is minimal, if any, 
basis for substantive disagreement. Because no notice of proposed 
rulemaking is required, the Regulatory Flexibility Act does not require 
an initial or final regulatory flexibility analysis.\3\ The Bureau has 
determined that these corrections do not impose any new or revise any 
existing recordkeeping, reporting, or disclosure requirements on 
covered entities or members of the public that would be collections of 
information requiring OMB approval under the Paperwork Reduction 
Act.\4\
---------------------------------------------------------------------------

    \3\ 5 U.S.C. 603(a) and 604(a).
    \4\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 1026

    Advertising, Banks, banking, Consumer protection, Credit, Credit 
unions, Mortgages, National Banks, Reporting and recordkeeping 
requirements, Savings associations, Truth-in-lending.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends 
Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 continues to read as follows:

    Authority:  12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
2. Amend supplement I to part 1026--Official Interpretations by:
0
a. Adding Paragraph 35(b)(2)(vi)(B); and
0
b. Revising Paragraph 43(f)(1)(vi).
    The addition and revision read as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Section 1026.35--Requirements for Higher-Priced Mortgage Loans

* * * * *
35(b) Escrow Accounts
* * * * *
35(b)(2) Exemptions
* * * * *
    Paragraph 35(b)(2)(vi)(B).
    1. The transaction threshold in Sec.  1026.35(b)(2)(vi)(B) differs 
from the transaction threshold in Sec.  1026.35(b)(2)(iii)(B) in two 
ways. First, the threshold in Sec.  1026.35(b)(2)(vi)(B) is 1,000 loans 
secured by first liens on a principal dwelling, while the threshold in 
Sec.  1026.35(b)(2)(iii)(B) is 2,000 loans secured by first liens on a 
dwelling. Second, all loans made by the creditor and its affiliates 
secured by a first lien on a principal dwelling count toward the 1,000-
loan threshold in Sec.  1026.35(b)(2)(vi)(B), whether or not such loans 
are held in portfolio. By contrast, under Sec.  1026.35(b)(2)(iii)(B), 
only loans secured by first liens on a dwelling that were sold, 
assigned, or otherwise transferred to another person, or that were 
subject at the time of consummation to a commitment to be acquired by 
another person, are counted toward the 2,000-loan threshold.
* * * * *

Section 1026.43--Minimum Standards for Transactions Secured by a 
Dwelling

* * * * *
43(f) Balloon-Payment Qualified Mortgages Made by Certain Creditors
43(f)(1) Exemption
* * * * *
    Paragraph 43(f)(1)(vi).
    1. Creditor qualifications. Under Sec.  1026.43(f)(1)(vi), to make 
a qualified mortgage that provides for a balloon payment, the creditor 
must satisfy three criteria that are also required under Sec.  
1026.35(b)(2)(iii)(A), (B) and (C), which require:
    i. During the preceding calendar year or during either of the two 
preceding calendar years if the application for the transaction was 
received before April 1 of the current calendar year, the creditor 
extended a first-lien covered transaction, as defined in Sec.  
1026.43(b)(1), on a property that is located in an area that is 
designated either ``rural'' or ``underserved,'' as defined in Sec.  
1026.35(b)(2)(iv), to satisfy the requirement of Sec.  
1026.35(b)(2)(iii)(A) (the rural-or-underserved test). Pursuant to 
Sec.  1026.35(b)(2)(iv), an area is considered to be rural if it is: A 
county that is neither in a metropolitan statistical area, nor a 
micropolitan statistical area adjacent to a metropolitan statistical 
area, as those terms are defined by the U.S. Office of Management and 
Budget; or a census block that is not in an urban area, as defined by 
the U.S. Census Bureau using the latest decennial census of the United 
States. An area is considered to be underserved during a calendar year 
if, according to HMDA data for the preceding calendar year, it is a 
county in which no more than two creditors extended covered 
transactions secured by first liens on properties in the county five or 
more times.
    A. The Bureau determines annually which counties in the United 
States are rural or underserved as defined by Sec.  
1026.35(b)(2)(iv)(A)(1) or Sec.  1026.35(b)(2)(iv)(B) and publishes on 
its public website lists of those counties to assist creditors in 
determining whether they meet the criterion at Sec.  
1026.35(b)(2)(iii)(A). Creditors may also use an automated tool 
provided on the Bureau's public website to determine whether specific 
properties are located in areas that qualify as ``rural'' or 
``underserved'' according to the definitions in Sec.  1026.35(b)(2)(iv) 
for a particular calendar year. In addition, the U.S. Census Bureau may 
also provide on its public website an automated address search tool 
that specifically indicates if a property address is located in an 
urban area for purposes of the Census Bureau's most recent delineation 
of urban areas. For any calendar year that begins after the date on 
which the Census Bureau announced its most recent delineation of urban 
areas, a property is located in an area that qualifies as ``rural'' 
according to the definitions in Sec.  1026.35(b)(2)(iv) if the search 
results provided for the property by any such automated address search 
tool available on the Census Bureau's public website

[[Page 29687]]

do not identify the property as being in an urban area.
    B. For example, if a creditor extended during 2017 a first-lien 
covered transaction that is secured by a property that is located in an 
area that meets the definition of rural or underserved under Sec.  
1026.35(b)(2)(iv), the creditor meets this element of the exception for 
any transaction consummated during 2018.
    C. Alternatively, if the creditor did not extend in 2017 a 
transaction that meets the definition of rural or underserved test 
under Sec.  1026.35(b)(2)(iv), the creditor satisfies this criterion 
for any transaction consummated during 2018 for which it received the 
application before April 1, 2018, if it extended during 2016 a first-
lien covered transaction that is secured by a property that is located 
in an area that meets the definition of rural or underserved under 
Sec.  1026.35(b)(2)(iv).
    ii. During the preceding calendar year, or, if the application for 
the transaction was received before April 1 of the current calendar 
year, during either of the two preceding calendar years, the creditor 
together with its affiliates extended no more than 2,000 covered 
transactions, as defined by Sec.  1026.43(b)(1), secured by first 
liens, that were sold, assigned, or otherwise transferred to another 
person, or that were subject at the time of consummation to a 
commitment to be acquired by another person, to satisfy the requirement 
of Sec.  1026.35(b)(2)(iii)(B).
    iii. As of the preceding December 31st, or, if the application for 
the transaction was received before April 1 of the current calendar 
year, as of either of the two preceding December 31sts, the creditor 
and its affiliates that regularly extended covered transactions secured 
by first liens, together, had total assets that do not exceed the 
applicable asset threshold established by the Bureau, to satisfy the 
requirement of Sec.  1026.35(b)(2)(iii)(C). The Bureau publishes notice 
of the asset threshold each year by amending comment 35(b)(2)(iii)-
1.iii.
* * * * *

    Dated: May 26, 2021.
David Uejio,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-11571 Filed 6-2-21; 8:45 am]
BILLING CODE 4810-AM-P
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